Question

Suppose again that furniture production is more ​capital-intensive relative to clothing​ production, which is more​ labor-intensive. If the relative price of furniture to clothing​rises, this will:___________.A. lower the incomes of both labor and capital owners.B. raise the income of labor owners.C. raise the income of both labor and capital owners.D. raise the income of capital owners.

Answer 1

Answer:Option (D). raise the income of capital owners

Explanation: Suppose again that furniture production is more ​capital-intensive relative to clothing​ production, which is more​ labor-intensive. If the relative price of furniture to clothing​ rises, this will raise the income of capital owners.